FCC Chairman Recommends Sirius-XM Approval

June 16, 2008

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"The tiers would no doubt be a way to get folks to buy something they might not buy anyways, which is what happens now," he said. "Even in the best-case scenario, having tier [subscriptions], you're talking about having a few take-it-or-leave-it packages created by companies, not consumers."

Other groups were similarly disgruntled.

"Overall this merger is a reward to the companies for managing to squelch competition between them," said Bert Foer, at the American Antitrust Institute. "We hope the FCC will stick by its original guns when they wanted competition in this industry."

Satellite Radio Alternatives: For Now and Beyond

Existing and future technologies played centrally into the Justice Department's decision. It cited competition created by alternatives to satellite radio, such as MP3 players, as well as the development of future technologies as part of the reasoning behind its decision.

MP3 players made the move long ago from the home to the car.

"Certainly there are more sources of music available than satellite radio," Ross Rubin, director of industry analysis for consumer electronics at NPD Group, said. "We've seen all kinds of products that enable consumers to keep iPods in their cars. But by and large, that MP3 experience today still requires managing a music library and transferring tracks manually to the player. It's not the lean-back experience that satellite radio [is]."

"The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term," the Justice Department said in a statement.

That future is now, NPD Group's Rubin said.

"[Mobile broadband] technologies have a great deal of potential to offer competition for satellite radio," he said. "They could be the bridge between services such as Napster and Rhapsody or even Internet radio offerings to get in to the vehicle."

Similarly, WiMax, a Sprint-supported technology, will offer in-vehicle high-speed broadband access. The company has said it will be up and running in select cities by April.

Another company is already launching a satellite-based assault on the in-car music market, Rubin said.

Slacker is a portable player that you can place in your car that beams fresh tracks down via satellite. The player also allows users to download songs to use when the player is ever out of range.

"Then you have hours of music where you don't need satellite or wireless coverage," Rubin said.

After users have paid for the hardware, the service is free and ad-supported. Those who want the ad-free version can pay $7 a month for it.

While strongly influential, Martin's recommendation doesn't completely sew up the deal for XM and Sirius. The FCC still has to make a final vote to approve the merger. Both companies got stockholder approval for the merger in November. The FCC initially granted the radio stations operating licenses with the provision against a merger between the two companies.

The Associated Press contributed to this report.

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